Corzine: NJ windfall should cut debt

Tony Kurdzuk/The Star-LedgerState Treasurer David Rousseau listens to a question from a member of rhe Senate Budget and Appropriations Committee Tuesday.

Gov. Jon Corzine acknowledged Tuesday that New Jersey is getting an unexpected budget windfall, but he said the extra cash should be socked away to help reduce the state's debt rather than spent to restore proposed cuts.

"Am I pleased we have the windfall that allows us to pay down debt? Absolutely," the governor said after Treasurer David Rousseau updated lawmakers on the state's budget outlook. New Jersey has $32 billion in debt, the fourth-heaviest burden in the nation.

Rousseau told the Senate Budget and Appropriations Committee that the state will take in $374 million more than the Corzine administration expected from now until the next budget year ends in June 2009. Most of the windfall comes from the income tax and corporate taxes based on tax returns last year, when the economy was in better shape.

"As the governor has said since February, we are at a turning point," Rousseau said, stressing that extra revenue should not equate to extra spending. "The time has come for us, together, to say: No more."

Corzine said most legislators seemed to have absorbed his budget message that the state will not spend more than it takes in, and have "a sensible understanding that tough choices need to be made if we're going to restore things."

The governor will restore some programs and soften some budget cuts, while cutting more deeply in other areas. Rousseau said he also has asked the Lottery Commission for a plan to raise an additional $25 million annually from new games.

Corzine will abandon his plan to scrap the Department of Agriculture, something that drew widespread opposition from lawmakers and a rally of angry farmers at the Statehouse. He still is axing the Commerce Commission and the Department of Personnel.

The governor also included $14.9 million in extra aid for 363 municipalities with populations of 10,000 or less, as he tries to phase in cuts intended to encourage small towns to consolidate. The additional funds are intended to prevent average local tax bills from rising more than $100 next year because of the cutbacks, Rousseau said.

The revised spending plan also would restore most of the planned cut to the state Election Law Enforcement Commission. Funding for state parks will be restored separately after Department of Environmental Protection officials develop a plan to make them self-supporting.

At the same time, Corzine proposed nearly $70 million in new cuts, including $14.3 million from two other municipal aid programs.

With the budget calling for rural towns to help pay for the State Police protection they receive, Corzine now also would require Irvington and Camden to ante up a combined $1.5 million for State Police presence in those cities.

Assembly Speaker Joseph Roberts (D-Camden) said he was especially pleased Corzine didn't propose further reductions in taxpayer rebates, which have been mentioned as a way to avoid other budget cuts.

"I feel very strongly that should be the last place we look," Roberts said. "I think our major challenge is to keep our eye on the ball in terms of fighting for spending reductions."

William Dressel, executive director of the New Jersey State League of Municipalities, said he wants state officials to restore the entire $190 million cut initially proposed for municipalities.

"We have to focus now on the legislative leaders and chairs of the budget committees to continue to restore all of the moneys," he said.

Rousseau emphasized the state continues to have serious budget problems, noting the recession will cut into revenues during the next budget year. David Rosen, budget director for the nonpartisan Office of Legislative Services, which released numbers very similar to the treasurer's, said he is forecasting just 2 percent growth in sales tax revenues, "clearly one of the worst years in the past couple of decades."